GlobeSt.com EXCLUSIVE: 1M-SF Hall Office Park Reaches Crossroads

"We have been looking at doing another building, but frankly, construction costs for steel and concrete have gone in such a manner that it's making new building challenging," Donald A. Braun, president of Hall Financial Group, tells GlobeSt.com. "Rental rates are firming up, but it would take a leap to justify a new building." The sweet spot of this year's leasing activity, 230,000 sf and rising, has sealed 23 deals, including expansions by existing tenants, while the park's owner, Craig Hall, a contrarian investor who's bucked Dallas' preconceived notions about developing in the far north sector, is testing the water for a sale or partnership.

"We're an entrepreneurial company," Braun says, "and we're able to take on projects with a certain level of risk. Once a building is built and leased, there is more efficient capital out there for those buildings than us." The no-ask offering for nine buildings--more than 1.1 million sf on 70.4 acres--came to market 30 days ago to test the institutional appetite for Hall's creation.

"We've gotten very strong institutional interest from just about every large institutional investor that you can imagine. We'll have a sense of direction in 30 to 60 days," Braun says of a campaign by the Holliday Fenoglio Fowler LP team of Jeffrey Stone and Andrew Levy, senior managing directors, and Todd Savage, associate director. "Hall Office Park presents well...and we're backing it up with strong performance on the leasing side."

Braun says Hall will hold onto 60 to 70 acres of undeveloped land for future projects regardless of the upcoming decision. Braun points out construction costs might be hindering new buildings right now, but the upside is an upward pressure on rental rates. Hall Office Park's mid-rise and high-rise buildings are bringing in the low $20 per sf range while the two-and three-story structures are getting $19 per sf to $20 per sf.

Braun says this year's 23 leases average seven-year terms and range from 677 sf to 50,000 sf. A pair of existing tenants--GE Capital and ThyssenKrupp--recently expanded and extended terms.

The Stamford, CT-headquartered GE Capital, now in 58,783 sf at 2611 Internet Blvd., will take down 39,400 sf at 3011 Internet Blvd., which is about two weeks from completion. As the construction crew digs into GE's finish-out, the leasing team is negotiating to fill another 26,000 sf.

ThyssenKrupp recently added 23,000 sf to take its total to 39,373 sf at 2591 Dallas Parkway for its decentralized corporate and regional office for the Americas and Canada. According to the offering, the Dusseldorf, Germany-based ThyssenKrupp extended the pact five years, pushing the expiration to July 2011.

Braun predicts this year's grand total will hit 300,000 sf. In the two previous years, the combined count was 445,000 sf. "Hall Office Park continues to get a disproportionate share of the leasing activity not only from our submarket but the city as a whole," he says. "People don't want to commute not only to the downtown, but they don't want to commute to the suburban loop markets."